Disposable Income Growth Stays at 2.8 Percent

Changes in real disposable income typically lead capital equipment consumption by almost 24 months.

Economics Post: 12/6/2018

Steven Kline, Jr.

Chief Data Officer, Gardner Business Media

The rate of growth in real disposable income has started to slow ever so slightly. This should lead to a peak in consumer spending either late in 2018 or early in 2019.

In October 2018, real disposable income was $15,700 billion. As is normally the case, real disposable income set an all-time high this month, up 2.8 percent from one year ago. Previous months saw downward revisions in real disposable income. As a result, the month-over-month rate of growth has slowed ever so slightly from what it was at the end of 2017 and beginning of 2018.

The annual rate of growth remained unchanged at 2.7 percent for the third month in a row. This followed five straight months of 2.8 percent growth. The slightly slower growth and downward revisions to previous months indicated that real disposable income should be considered a negative leading indicator.

Keep in mind that changes in real disposable income typically lead capital equipment consumption by almost 24 months.